This study investigated appropriate frameworks to better understand the way in which housing policy mechanisms contribute to economic productivity and growth. It reviewed the literature, key Federal Government policy statements and reports released over the past decade; analysed the mechanisms through which housing policy influences economic behaviour; and tested such frameworks to better comprehend these processes.
This research investigated how housing policy and policy instruments intersect with economic processes and productivity at multiple spatial scales; different levels of government and different locations. It has also sought to illuminate how economic policy instruments that are not specifically housing oriented have housing effects.
This research supported the AHURI Inquiry into housing policies, labour force participation and economic growth by developing and testing frameworks which support understanding of housing policy and policy instruments and productivity.
Two main conceptual frameworks were constructed to appraise how various housing and economic policy instruments intersect in policy and via the actions of economic actors. The first framework was an inventory of housing and economic policy instruments at federal, state and local scales that identified the mechanisms in operation, their economic effects and any influence on economic productivity, plus the geographic scale at which these effects occurred along with the key actors involved. The second framework established a schematic through which the effects of various instruments could be traced through the housing system via housing economic actors responding to changes in their user cost of capital.
The research tested the conceptual frameworks via three focus groups appraising the effects of four selected housing policy instruments on the housing system within metropolitan Melbourne at three spatial scales: inner, middle suburban and outer suburban and demonstrated that the ways governments shape economic decisions can be better understood.
The research concluded by identifying a set of enhancements to Australia’s national approach to housing policy and economic policy coordination. The principal recommendation is the formation of a dedicated housing policy capability oriented to strengthening the formal policy treatment of housing as an economic asset that has implications for national economic productivity.
This should be supported by a strengthened policy perspective on how various elements of the housing and economic spheres intersect with a view to improving policy coordination and coherence.
A stronger understanding of the positioning of housing policy in relation to economic policy and thus a broader conceptual framework is necessary to develop evidence-based policy that encompasses the complexity of housing in a systematic way.
Policy Development Outcomes
The major finding is the substantial scope for improvement in housing policy dialogue within Australia, especially among the policy agencies of the Commonwealth Government. In particular, analysis suggests there is a need to grow an understanding of how housing defines aspects of economic activity, including productivity, among the general public as well as the policy community. Several measures that could be taken to achieve this are:
Establishment of a stronger housing policy agency. With the abolition of the National Housing Supply Council (NHSC) by the current government, Australia lacks clear capability to understand best policy for housing and its impact on the broader economy. To cover this gap, an agency within government should be tasked with exploring and reporting on housing across various levels of government, and its role within the broader economy, including improving economic productivity. This would go beyond the supply focus of the NHSC. Regular reporting requirements as well as a requirement to engage with the media, policy-makers and researchers and industry stakeholders should be a mandate of the agency. The agency should have direct reporting line to Treasury as well as other relevant portfolios including Social Services. This may be best facilitated by the formation of a formal Ministerial role.
Regular housing social and economic impact statement requirements. Our research shows that housing is a complex phenomenon that is intricately woven throughout the economy. It therefore seems appropriate that government departments and authorities provide regular housing impact statements (independent of whether 1 above) is enacted). An important feature of such reports would be to adopt a unifying framework such as the one presented in this research. Employing concepts like the ‘user cost of capital’ such as we have done would provide a valuable analytical perspective.
A national review of housing policy within the federation. A review of national level housing policy and its intersection with social and economic processes and policy is overdue. This review should assess all housing policy instruments identified in this report, including those not formally designated as specific to housing (e.g. negative gearing) to improve their formulation and coordination, including effectiveness in achieving housing objectives. The review would need to go beyond the limited scope of the Federation Review of Housing and Homelessness (FRHH) paper.
AHURI Final Report
Australian Housing and Urban Research Institute Limited 2017